Key motion on council funding for constructing new homes passed

The Liberal Democrats will support councils pooling borrowing limits to build new homes, after a key motion on the economy was passed today.

But an amendment allowing caps to be lifted entirely was rejected, after Nick Clegg said it would mean homes could not be delivered now.

In an unusual move, the party leader spoke to summarise the motion, and appeared not to rule out supporting the lifting borrowing caps entirely in the future.

He told members he was ‘more than happy to sit down with our colleagues at the LGA and find our way through this’, but said ‘not a single home would be delivered’ if the amendment carried.

‘This motion is… about what we can do now, not in 10, 15 years, what we can do now,’ he said.

‘It is my sincerely held belief that on accepting the motion, which is all about allowing councils for the first time to be free of some of the shackles imposed on them by treasury that basically swap the cap or allowance they are given to build houses… we will build more houses now.

‘If we on the other hand delete all of that and go for a complete revolution of the way things are done, not a single extra affordable home will be built under our watch. That cannot be right.’

The amendment was comfortably defeated by delegates after the leader’s speech.

Speaking in favour of it, Paul Holmes MP for Chesterfield said: ‘The construction of social homes has collapsed in this country.

‘If we want social justice, it is about building more social housing.’

The Local Government Association said 600,000 new homes could be built in five years if they were allowed to invest in housing against normal borrowing guidance.

Pooling borrowing limits would allow councils not using their full entitlement to donate it to those with large housing waiting lists.

The motion also calls for an urgent examination of whether council borrowing for housing could be kept off the national balance sheet, as is the case in Europe, so it would not inflate the deficit.

Motions passed at the Liberal Democrat conference become party policy- and key policies are likely to feature in their manifesto for the 2015 general election.

Ruth Dombey, vice chair of London Councils, said: ‘We would prefer to see the artificial cap on council borrowing lifted entirely. However, London Councils welcomes Vince Cable’s announcement today that he firmly supports enabling councils with a sustainable business model to borrow to invest in building more homes for rent.

‘Mr Cable supports a view held across the housing sector and local government, that sensible borrowing by local authorities to fund house building is part of the solution to the housing crisis.’

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